Calculate the equilibrium value of the output and aggregate demand when autonomous investment and consumption (C + I) is Rs. 80 crores and MPC is 0.2. Option 1: 150 crores. Option 2: 100 crores. Option 3: 90 crores. Option 4: 25 crores.

Answer: 100 crores. Solution: Equilibrium output: Y = (C + I)/(1 - c) where c = MPC. Y = 80/(1 - 0.2) = 80/0.8 = 100 crores. At equilibrium, aggregate demand equals output, so both equal Rs 100 crores.

Macro

Income & Employment

Easy

Calculate the equilibrium value of the output and aggregate demand when autonomous investment and consumption $(\overline{C} + \overline{I})$ is Rs. 80 crores and MPC is 0.2.

150 crores.

100 crores.

90 crores.

25 crores.

✅ Correct Option: 2

Equilibrium output: $Y = \frac{\overline{C} + \overline{I}}{1 - c}$ where $c$ = MPC.

$Y = \frac{80}{1 - 0.2} = \frac{80}{0.8} = 100$ crores.

At equilibrium, aggregate demand equals output, so both equal Rs 100 crores.

2026: 11 May Shift 2

Match the LIST-I with LIST-II

LIST-I	LIST-II
A. Marginal Propensity to Save (MPS)	I. Consumption per unit of income.
B. Average Propensity to Save (APS)	II. Savings per unit of income.
C. Marginal Propensity to Consume (MPC)	III. Change in consumption per unit change in income.
D. Average Propensity to Consume (APC)	IV. Change in savings per unit change in income.

Choose the correct answer from the options given below:

2025: 22 May Shift 2

Aggregate demand for final goods consists which of the following?

(A) Ex-ante consumption.

(B) Ex-ante Investment.

(D) Effective demand.

Choose the correct answer from the options given below:

2022: 10 Aug Shift 2

Identify the statement that stands true during deficient demand :

(A) Actual output falls short of potential output

(B) Potential output falls short of actual output

(D) Expected demand is less than actual demand

Choose the correct answer from the options given below :

2025: 26 May Shift 2

The saving function of a two sector economy is given as S=(-)100+0.2Y. The equilibrium level of income of this economy is 1000, then calculate the value of consumption at equilibrium?

2025: 21 May Shift 1

In a hypothetical economy, the consumption function is given as C = 100 + 0.75Y. The autonomous investment in the economy is 200 crores. The equilibrium level of income would be______?

2025: 27 May Shift 2

The equilibrium level of income depends on aggregate demand. Thus, if aggregate demand changes, the equilibrium level of income changes. This can happen in anyone or combination of the following situations:

(A) Change in autonomous consumption.

(B) Change in marginal propensity to consume.

(D) Change in autonomous investment.

Choose the correct answer from the options given below:

Calculate the equilibrium value of the output and aggregate demand when autonomous investment and consumption (C‾+I‾)(\overline{C} + \overline{I})(C+I) is Rs. 80 crores and MPC is 0.2.

Solution

Related questions:

Keyboard Shortcuts

CUET Economics Past Year Questions (Topic-Wise)

Calculate the equilibrium value of the output and aggregate demand when autonomous investment and consumption $(\overline{C} + \overline{I})$ is Rs. 80 crores and MPC is 0.2.